Republic v. Fetalvero
REITERATIONFacts
The Antecedents: Benjohn Fetalvero (Fetalvero) owned a parcel of land from which the Department of Public Works and Highways (DPWH), Region X, expropriated 569 square meters for a flood control project. Parties failed to agree on just compensation. The Republic of the Philippines (Republic), through the Office of the Solicitor General (OSG), filed an expropriation case against Fetalvero. The OSG deputized Atty. Earnest Anthony L. Lorea of DPWH Region X to assist in the case, with the reservation that only notices served on the OSG would bind the government. A Compromise Agreement was entered into by the parties, stipulating a total of PHP 13,566,000.00 for 1,428 square meters at PHP 9,500.00 per square meter, to be paid by September 2009, with interest thereafter. The Regional Trial Court (RTC) approved the Compromise Agreement and rendered judgment. Procedural History: Fetalvero filed a Motion for Issuance of a Writ of Garnishment after the Republic allegedly ignored a Writ of Execution. The Republic opposed, arguing the Compromise Agreement was not binding as it was not reviewed by the OSG and that government funds are not subject to garnishment. The RTC granted the Motion for Garnishment, holding that the OSG was deemed bound by the judgment due to its receipt of the order approving the compromise and that the funds were appropriated for right-of-way payments. The RTC denied the Republic's Motion for Reconsideration. The Court of Appeals (CA) affirmed the RTC's Orders, finding that the OSG's inaction despite receipt of the order approving the compromise agreement bound the Republic, and that public funds allocated for judgment satisfaction could be garnished. The Petition: The Republic filed a Petition for Review on Certiorari before the Supreme Court, assailing the CA's Decision. It argued that the Compromise Agreement was void for lack of OSG review and for a grossly disadvantageous compensation rate, and that government funds cannot be seized by execution or garnishment without prior filing with the Commission on Audit (COA).
Issue(s)
Whether or not the Compromise Agreement is void for not having been submitted to the Office of the Solicitor General for review. Whether or not the Compromise Agreement is void since the amount of just compensation is allegedly grossly disadvantageous to the government. Whether or not government funds may be seized under a writ of execution or a writ of garnishment in satisfaction of court judgments.
Ruling
The Petition is PARTLY GRANTED. The Court of Appeals' Decision is REVERSED and SET ASIDE, insofar as it affirmed the RTC Orders granting the writ of garnishment. This is without prejudice to Fetalvero filing his adjusted money claim before the Commission on Audit. The remaining just compensation due is subject to legal interest.
Ratio Decidendi
On the voidity of the Compromise Agreement for lack of OSG review: The Court reiterated that while the OSG's deputized counsel, Atty. Lorea, should have submitted the Compromise Agreement to the OSG for review and approval due to the reservation in the deputation letter and notice of appearance, the government is nonetheless bound by the agreement due to laches. The OSG was furnished copies of the orders referring the case to mediation and approving the Compromise Agreement. Its failure to question the validity of the agreement or the judgment within a reasonable period, despite receiving notice, estopped the Republic from later assailing it on this ground. The Court emphasized that service of notices on the OSG is crucial for binding the government, and in this case, the OSG received the order approving the compromise agreement, thus binding the Republic. On the voidity of the Compromise Agreement due to grossly disadvantageous just compensation: The Court held that this claim involves a question of fact, which is generally improper in a petition for review on certiorari under Rule 45. The Court noted that a judgment on a compromise agreement has the effect of res judicata and is immediately final and executory unless set aside due to vices of consent. The Court also pointed out that the petitioner failed to appeal the judgment within the reglementary period and instead resorted to a petition for certiorari, which is not a substitute for a lost appeal. Therefore, the claim regarding the disadvantageous compensation rate could not be entertained on these grounds. On the seizure of government funds by writ of execution or garnishment: The Court reiterated the general rule that government funds cannot be seized by writs of execution or garnishment to satisfy judgments, as disbursements must be covered by appropriations and public service should not be paralyzed. However, it clarified that while the Republic is bound by the Compromise Agreement and the judgment, the satisfaction of the money claim must still be pursued in accordance with the procedures laid down in Presidential Decree No. 1445. This means the claim must first be filed with the Commission on Audit (COA). The Court found that Fetalvero failed to show that he first raised his claim before the COA, rendering the RTC's issuance of a writ of garnishment premature and violative of Administrative Circular No. 10-2000 and COA Circular No. 2001-002. The Court also imposed legal interest on the remaining just compensation due.
Main Doctrine
Money claims against the government, even if reduced to a judgment based on a compromise agreement, must first be filed with the Commission on Audit before resort to writs of execution or garnishment, unless the government is estopped by laches from questioning the validity of the compromise agreement and the subsequent judgment.